SaaS Customer Churn: 7 Ways to Stop Attrition in Its Tracks

There are two key drivers to business growth: acquiring new customers, and retaining existing customers. Both of these efforts are crucial in building a successful business, and each approach drives growth in a different way. However, it’s widely known that acquiring new customers is far more expensive than retaining existing ones. Knowing this, businesses must have a plan in place for retaining more customers, or inversely, reducing churn.

In this article, we’re going to look at some possible ways to reduce customer churn, and leverage retention to grow your business.

What is customer churn?

Churn, also referred to as attrition, is the rate at which your customers discontinue their subscription to your service. It represents customers who are leaving your business because they’re no longer happy or getting value out of your product.

Calculating churn

There are a number of ways to calculate churn. In the simplest form, churn rate is calculated by taking the number of customers lost divided by the number of total customers during a given time period.

7 ways to reduce customer churn

1. Understand why churn happens

Before you can tackle a churn problem, you need to understand why churn is happening in the first place. The easiest way to understand why people churn is to ask them. Talk to customers who recently canceled their subscriptions. Getting them on the phone is ideal, but even a brief email can uncover critical feedback.

For larger businesses with more volume, a short churn survey can help identify reasons for customer attrition. Before your customers click the final “cancel” button, prompt them to select a reason for their churn. Don’t go overboard here though. Keep in mind, these customers are on their way out, they’ve already made up their decision. Don’t require them to fill out a multiple question survey.

You can also look at adoption metrics for churned customers vs. successful customers. What are your most successful customers doing that your churned customers are not doing? Use those insights to then roll out a plan for educating customers on doing those successful actions more often. Maybe that’s changing your onboarding plan, introducing more best practices, or changing something in your product.

2. Improve the onboarding experience

Onboarding is one of the most critical moments for your customers’ relationship with your product or service. If you drop the ball during onboarding, you’re starting off on the wrong foot and this can be very costly. A poor onboarding experience can result in an unhappy, unsatisfied, and unmotivated customer early on. This can be expensive and may often even result in early churn.

Level up your onboarding experience by designing an onboarding process and a team to support it. Depending on your product or service, self-service onboarding might do the job. For more complex products, high-touch or “white glove” onboarding might be necessary. Whatever the case, nailing onboarding will accelerate the time it takes for your customers to realize the value your product or service provides.

3. Design an early-warning system

As you learn more about how your customers interact with your product, you’ll identify behaviors that correlate to successful customers and behaviors that correlate to at-risk customers. Use these qualitative and quantitative signals to build an early-warning system. Maybe it’s login frequency, failure to adopt a certain key feature, or flagging unresponsive customers.

An early-warning system enables your customer-facing teams to engage at-risk customers before it’s too late. This proactive outreach is a golden opportunity to convert an unhappy or disengaged customer to a customer who champions your product.

4. Deliver value during every engagement

Avoid generic “check-ins” with customers. Use each engagement as an opportunity to bring the customer something of value. Maybe it’s a demo of a new feature, or a quick training session on an area of the product they haven’t touched yet, or an update on what’s on the roadmap.

To truly deliver value, you need to understand your customers’ definition of success. What are their business objectives? Tie everything back to these objectives to make each engagement relevant and useful to the customer. Make every engagement about them, not you. By using every touch-point to deliver value to your customer, they will feel valued themselves.

5. Improve the quality of service

“There’s no place to hide if you deliver lousy service to customers.”
Nicholas J. Webb, What Customers Crave

It’s widely known that lousy customer service is a big reason for churn. In fact, the experience your customers have interacting with your company is so tremendously important that by delivering great service, they’ll stick with you even if your product isn’t perfect.

It’s no longer an option to think of customer support as an afterthought or a cost center. Customer support is a growth driver. At a bare minimum, you need great customer support. To differentiate, you need to go above and beyond.

Put yourself in your customers’ shoes. What does it feel like to request help from your company? What is the level of effort your customers endure to solve their problems? Answer these questions and you’ll be well on your way to designing a better customer experience and delivering higher quality service.

6. Educate your customers

Disengaged customers might be the result of uneducated customers. This could be a lack of understanding around how to use your product, but also why to use your product. Educating customers can close both of these gaps.

Leverage your help center, marketing website, blogs, and webinars to educate your customers. Bring them how-to’s, best practice, and industry knowledge. Creat content that educates, informs, and inspires. Build a community where your customers can interact and learn from other customers. A community isn’t just a great place to build connections, it can be a powerful vehicle for educating customers on a 1:many scale.

7. Stay tuned into your customers and your competitors

Your customers are your most valuable asset. Don’t leave them in the dark after they’ve onboarded. Keep a pulse on how they’re doing. Maybe your largest customers are stretching the product to its limits and hitting their heads on the ceiling due to their sheer size and scale. You need to be aware of these points of friction, as they can often lead to churn.

Don’t let your customers leave you for a competitor. Figure out ways your customers can grow and scale with you. Don’t obsess over your competitors, but be aware of where they’re heading. Are they offering industry-changing functionality you aren’t? Stay in the loop with the space you’re playing in and use this information to drive your business forward and build a product your customers love and want to use forever.

Conclusion

Every company deals with churn. It’s an inevitable part of running a subscription-based business. The reasons for churn vary but there’s a lot we can do to take face churn head-on. We can slow the “leaky bucket” by closing gaps in weak customer experiences, engaging customers at the right time, and helping them realize value sooner.

Looking for more customer retention strategies? Check out these loyalty-boosting methods for keeping customers around.